Archive for April 5th, 2012

5th April
2012
written by Steve Berg

Last week, the House of Representatives passed a budget resolution on a largely partisan vote.  Many people are asking what the impact of this “Ryan budget” (named after Rep. Paul Ryan (R-WI), the author) will be and what it means, so I’ll supply a brief explanation here.  As Amanda blogged about on March 22, a budget resolution sets the general outlines for Congress’s work on the budget for the year.

The House’s budget resolution, H.Con.Res. 112, would cut federal spending by about $5 trillion total over the next ten years, compared to the already-low spending levels in last year’s big debt deal – the Budget Control Act of 2011. (To put this in context, federal spending totaled just under $3.6 trillion in 2011.) Where would it get those savings?

For the 2013 fiscal year, discretionary spending – which is all of the spending decided annually by the Appropriations Committees – would be reduced even further than in the first round of cuts under the Budget Control Act, by about 2 additional percent to $1.028 trillion – and that entire additional cut could come from domestic programs, with no further cuts to military spending. If enacted, this would put further downward pressure on funding for discretionary spending programs, including all targeted homelessness programs and virtually all HUD programs.

Entitlement programs like Medicaid are not considered discretionary spending (it’s referred to as “mandatory” spending); they, however, would also be reduced under the House budget resolution through a separate process.  In the longer run, spending reductions would be even more extreme. These cuts in lifeline programs are coupled with large reductions in taxes for the wealthiest Americans.

So, that’s what the Ryan budget includes – but what will the impact be?

The first important thing to know about the House budget resolution is that, as a comprehensive plan for federal revenue and spending, it is going nowhere. At least, not this year.  The Senate leadership and the President have repeatedly said that they will agree to budget changes to address long-term federal deficits in a manner that is “balanced” between revenue increases and spending cuts from both domestic programs and the military. Although the budget resolution itself does not require the President’s signature, the changes it proposes would all require separate legislation to actually go into effect: appropriations bills, changes in the tax code, and overhauls of entitlement programs – none of which the Senate or President will agree to at this point.

The second important thing about the House budget resolution, however, is that one provision could have a real impact right away: its overall limit on discretionary spending will apparently be used by the House Appropriations Committee as it produces the House version of FY 2013 spending bills this spring. The Senate, on the other hand, will produce bills based on the higher limit agreed to in the Budget Control Act, setting up a conflict between the two chambers.  Conventional wisdom says that when the two chambers meet to work out final agreements, the totals will come out to the higher levels used by the Senate.  This, however, remains to be seen – the House could insist on the lower levels, bringing either additional cuts or a government shutdown when the fiscal year starts on October 1.

The third important thing to know is that the House budget resolution represents a school of thought calling for immense change in the role of the federal government.  Its long-term vision is of a federal government that does little other than run retirement and healthcare programs and the military.  In the long run, there is no room in this budget for HUD, or for any federal response to homelessness, inadequate housing, or poverty.  That a majority of the House of Representatives is willing to endorse such a vision is a new phenomenon in our lifetime.  It ignores, among other things, the effective, important work that is being done on homelessness by using federal funds to get excellent results for the most impoverished people in our country.

Image courtesy of 401K.

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